Highest And Best Unit Vs. Permits: An Official Response From Fannie

[Mejappz]

USPAP has been getting "revived" every two years for decades now. It still has many ambiguities, numerous contradictions, lacks definitions and logical rigor, and has a poor structure (e.g. the SOW regulations) that invites additional problems, all of which have a negative ripple effect on the entire appraisal industry.

Bert- didn’t you get the memo those big salaries and obscene pension plans need upkeep.

 

[Mike Kennedy]

For those who may have missed it USPAP AO-28 Illegal Use

" legal status (e.g., compliance with zoning, building codes, use permits "

https://appraisersforum.com/forums/threads/USPAP-ao-28-illegal-use.223809/

p.s. have a nice day.

 

[RCA]

Most government workers (those in the planning department and/or the assessor's office) don't like to use the word "legal" when talking to them about this type of issue. The prefer to say it's a conforming or non-conforming lot or use or structure(s). So if the zoning ordinance states that one of (or the only) permitted uses is a SFR and that's what exists then it is a conforming uses. All conforming uses are legal uses, by definition and by logic. If you add a room then it's a bigger house. If you add a room and it encroaches on the set backs then that is a problem. If you add a bathroom and it exceeds the allowable wet utilities then that's a problem. If you convert a garage to living area without building a second garage where covered parking is required that's a problem.

This really isn't an HBU issue. For us, it's an issue of mitigating the risk of liability. Having permits for the work basically blesses the work and unseen problems are not our fault. But if they didn't get a permit then we have some exposure to liability if we don't condition the appraisal on getting the permits. Read and understand the laws, regulations, ordinances, etc., etc. For every assignment.

Personally, I access the zoning laws and save them as pdf documents in the work file. Sometimes I use them in an exhibit addendum.

This is not rocket surgery.

The definitions of "nonconforming use" (or conversely "conforming use") are just as messed up as the term "legally permissible".

Here should be the correct definition:

Nonconforming Use: A use of the land or structure which may or may not have been established at the time of construction or original use, but which does not meet current zoning and building regulations.

Illegal nonconforming use can be often be made legal, through grandfathering, waivers, and other actions by the local planning authority.

 

[Mark K]

Here should be the correct definition:

Nonconforming Use: A use of the land or structure which may or may not have been established at the time of construction or original use, but which does not meet current zoning and building regulations.

At the time this was created and/or cut and pasted, it may or may not have been as ambiguous as other allegedly less confusing definitions.

 

[RCA]

At the time this was created and/or cut and pasted, it may or may not have been as ambiguous as other allegedly less confusing definitions.

This is not cut or pasted, I created it as an amalgamation of several other definitions and facts. I think it could be better worded though ( I didn't polish the definition); The problem polishing the definition is that you have to go back to some time in the past, and it is not at all clear exactly what that time might be. Recorded deeds for property may go back hundreds of years, and buildings built and torn down several times, multiple land use changes. So what is time zero? For construction, it is a bit easier, you can probably refer to "original construction". It gets cloudy with the likes of historical properties. Land is a *****, Typically goes something like agricultural use to subdivision. What about commercial, that's even more difficult in some cases.

Have to think about the polishing aspect.

From a problem-solving perspective, I'm influenced mostly by what is right around me. The City of Pacifica does variances, with town meetings on community TV, neighbors have their say, both residential and commercial and there is a vote, not to forget hired attorneys, engineers, contractors, and other professionals. Everything is a bit fluid and in flux. Complex, with many zones, the Coastal Commission, the environmentalists. Earthquake, landslide, flooding, forest fire country. Mixed-use and commercial in the middle of residential. Ocean view, mountain view, partially obstructed or not, and so on and so forth. Don't forget the endangered frogs, butterflies and you name it. Oh yea, "non-conforming" - a slippery slope.

 

[PhiloFarnsworth]

Could we appraisers come up with some nomenclature to remove the annoying confusion of using "permitted" as meaning allowed and "permitted" as meaning that permits were obtained? How about using "allowed" or "allowed according to local code" in place of the first meaning. In fact, even more confusingly, there are many jurisdictions and situations (older homes in rural areas) where non-permitted (additions where permits were never obtained) are considered by local zoning officers to be permitted.
Of course, this is a profession where the metal plate on the exterior of a mobile home is a "label" and the paper label on the inside of the kitchen cabinet is the "plate". And it will ever be thus. *sigh*

 

[George Hatch]

The verbiage we use for that HBU element is "legally permissible". It isn't "With Permits" .

From an economic standpoint, if the market participants understand that a given feature or use can effectively continue indefinitely and that's how they're reacting to that feature then it doesn't matter what labels or verbiage someone uses to describe the situation. Their actions are their actions.

It only becomes complicated when we're trying to say one thing (allowable or permissible or tolerated) whilst doing something that's sometimes different (With Permits). When we're trying to mischaracterize the market's actual reaction to that feature. When we're doing some version of mortgage value instead of market value.